In simple terms, holiday pay is a specific form of compensation an employee receives from the employer during holidays. This salary can be a part of a bonus or a form of compensation for working on holidays.
Many companies offer their workers holiday pay as a part of paid time off when business operations are closed. But employees who work even on holidays are rewarded holiday pay in the form of an additional bonus.
In the United States, employees who work during holidays get paid 1.5 times the regular hourly wage as holiday pay.
What is the Law Regarding Holiday Pay?
According to several international laws, it's mandatory for all companies to provide their employees with sufficient holidays and subsequent bonuses. But in the U.S., no specific law regarding holiday pay exists in any state.
Even in the Fair Labor Standards Act (FLSA), there isn’t any mention or requirement regarding the structure of holiday pay. However, the federal law of the U.S. requires all companies to offer necessary public holidays during religious festivals and celebrations.
Why Do Companies Offer Holiday Pay?
Although federal law doesn’t require companies to offer holiday pay, it can be highly beneficial from a business perspective. For instance, holiday pay can significantly increase the morale and motivation of employees and help in employee retention.
In addition to having a great time with family and friends, workers can also receive an extra bonus that will improve their lives.
Besides, holiday pay also encourages many employees to earn overtime bonuses by working on holidays. In this way, companies can have enough manpower to keep the business operating even during holidays. That’s why many companies keep the culture of holiday pay even though it’s not required by law.
How Can a Company Offer Holiday Pay?
Since there’s no legal obligation, the structure or pattern of holiday pay can vary from one company to another. For instance, companies can offer holiday pay to both part-time employees and full-time regular employees.
In fact, all kinds of employees, including salaried employees and hourly employees, can be offered holiday pay. However, the management shouldn't use holiday pay as a tool for employee discrimination. To remove all confusion regarding holiday pay, the structure of paid bonuses should be mentioned in the job offering letter.
What are the Standard Paid Holidays?
Paid holidays can vary from one country to another depending on the tradition, culture, and history. In the US, there are many paid holidays, including:
Martin Luther King Day
New Year's Day
However, companies don’t necessarily need to provide holiday pay during these days. They have full freedom to choose the frequency, structure, and whether to even offer holiday pay or not.